Hong Kong and Türkiye sign a pact to provide companies with double taxation relief

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The CDTA will come into force after the completion of ratification procedures by both jurisdictions.

Hong Kong’s Secretary for Financial Services and the Treasury Christopher Hui, and the Commissioner of the Turkish Revenue Administration Bekir Bayrakdar, have signed a comprehensive avoidance of double taxation agreement (CDTA) on behalf of the SAR Government and Türkiye respectively.

Having taken place in Hong Kong, the signing ceremony marked the conclusion of the 51^st agreement that Hong Kong has made. This CDTA sets out the allocation of taxing rights between the two jurisdictions and will help investors better assess their potential tax liabilities from cross-border economic activities.

In accordance with the Hong Kong-Türkiye CDTA, Hong Kong companies can enjoy double taxation relief in that any tax paid in Türkiye, whether directly or by deduction, will be allowed as a credit against the tax payable in Hong Kong in respect of the same income, subject to the provisions of the tax laws of Hong Kong.

Moreover, the CDTA also provides the following tax relief arrangements:

1. Türkiye's withholding tax rate for Hong Kong residents on dividends will be capped at 5% or 10% (depending on the percentage of their shareholdings); while that on interest and royalties will be capped at 10%, and further reduced to 7.5% if the interest is received by a financial institution in respect of a loan or debt instrument with a maturity period exceeding two years, or if the royalties are for the use of, or the right to use, industrial, commercial or scientific equipment;
2. Hong Kong airlines operating flights to and from Hong Kong and Türkiye will be taxed at Hong Kong's corporation tax rate on their profits, and will not be taxed in Türkiye; and
3. Profits from international shipping transport earned by Hong Kong residents arising in Türkiye will not be taxed in Türkiye.

The CDTA will come into force after the completion of ratification procedures by both jurisdictions.

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Photo / HKSAR Government Press Releases